Presented below are data taken from the records of Kingbird Company December 31,

Question

Presented below are data taken from the records of Kingbird Company December 31, 2017 December 31, 2016 Cash Current assets other than cash Long-term investments Plant assets $15,000 85,100 10,000 337,000 $447,100 $8,000 59,600 52,800 213,700 $334,100 Accumulated depreciation Current liabilities Bonds payable Common stock Retained earnings $20,200 39,800 74,900 253,000 59,200 $447,100 $40,200 21,900 -0 253,000 19,000 $334,100 Additional information · Held-to-maturity securities carried at a cost of $42,800 on December 31, 2016, were sold in 2017 for $33,800. The loss (not unusual) was incorrectly charged directly to Retained Earnings. 2. Plant assets that cost $50,200 and were 80% depreciated were sold during 2017 for $7,900. The loss was incorrectly charged directly to Retained Earnings. 3. Net income as reported on the income statement for the year was $57,400 4. Dividends paid amounted to $6,060 5. Depreciation charged for the year was $20,160 Prepare a statement of cash flows for the year 2017 using the indirect method. (Show amounts that decrease cash flow with either a -sign e.g. -15,000 or in parenthesis e.g. (15,000)

Explanation / Answer

Kingbird company

Statement of cash flows for the year ended December 31

Net income = $57400 - $9000 - $2140

= $46260

Beginning plant assets $213700

Cost of sale of assets ($50200)

Ending plant assets ($337000)

Purchase of plant assets $173500.

Particulars Amount($) Cash flows from operating activities: Net income $46260 Adjustments: Depreciation $20160 Loss from sale of securities $9000 Loss from sale of plant assets $2140 Increase in current assets ($25500) Increase in current liabilities $17900 Net cash flows from operating activities $69960 Cash flows from investing activities: Sale of plant assets $7900 Sale of securities $33800 Purchase of plant asets ($173500) Net cash flows from investing activities ($61840) Cash flows from financing activities: Issue of bonds payable $74900 Dividend paid ($6060) Net cash flows from financing activities $7000 Beginning cash balance $8000 Ending cash balance $15000

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